After the recession, a whopping number of Baby Boomers say money isn’t the most important thing they hope to leave to their kids

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After enduring the financial impact of the recession, a whopping number of Baby Boomers say money isn’t the most important thing they hope to leave to their kids.

They don’t just want to leave an inheritance; they want to leave a legacy.

“It is more important to us to leave the legacy of what we value than to leave a large amount of money for our children,” said Kathleen Moynihan, a 53-year-old mother of three from Concord, Mass.

“Your values become the new valuables,” said Derrick Kinney, a financial adviser and owner of Derrick Kinney & Associates in Dallas. “Giving your kids the gift of knowing what is important to you gives them a reason to help protect and manage lasting wealth,” he said.

Indeed, 75 percent of Boomers said passing down family values and life lessons was more important than the actual monetary amount they’re leaving in the inheritance, according to a recent survey by Allianz Insurance.

Keith Ogorek, senior vice president of marketing at Legacy Keepers, a firm that helps people preserve their family memories in audio, video and book form, said he thinks it’s a combination of the fact that many Boomers grew up during the 60s and tend to be of a more activist mindset that they want to leave the world a better place, coupled with the fact that they’ve lived through the financial devastation of the recession.

“They lived through a time of reshaping the culture. Making their mark. Everything from ending segregation to protesting the war, the sexual revolution and women’s rights,” Ogorek. Said. “It’s not surprising that that they want to leave something behind besides their finances.”

Now, you might think that they're downplaying the importance of money because they don't have any — or a lot less, anyway — since the recession. You know, the 'ol — You want a tip? I've got a tip for you. Stay in school!

In fact, it's more that the financial impact of the recession is still fresh for many, so they want to make sure that instill in their kids how to be smart with their money.

“Family fortunes potentially are not as great as they were six, seven years ago … Putting money in market and watching it go up is not the rule any longer,” said Stacy Francis, a personal-financial adviser in New York and founder of Savvy Ladies, an organization aimed at teaching women about money.

“It’s about being smart about where you put your money in the market,” she said.

“You can give a child a fish but you can also give a child a fish and teach them how to fish in the future,” Francis said. “We see it over and over again, the same story — individuals coming into a lot of wealth and not knowing how to manage it. That wealth being potentially squandered,” Francis said. “That’s what people don’t want to have happen in their family.”

Moynihan said their priorities are to teach their children the importance of charitable giving and that education is very important to be successful. So, she and her husband have set it up where one-third of their wealth goes to their children, one-third goes to charities and one-third to the grandchildren. They have a donor-advised fund at Fidelity that they hope their children will continue to donate to after they are gone and have created an educational trust for their grandchildren to help them pay for college.

A lot of people set up a trust for their kids with specific rules about how and when the inheritance money is doled out.

“The goal is to have a document that would act like the parents would — when they would give the kids financial support and when they would not,” said Jerry Lynch, a financial adviser and owner of JFL Consulting in Fairfield, N.J.

For example, Lynch said, a parent might offer incentives such as:

Matching investment dollars — if the kid invests $5,000 per year, the trust matches it

Matching funds to charity

Matching a down payment on a home

Matching funds to start a business

Or, he said, DIS-incentives such as:

No job, no funds

Withholding funds in response to drug, alcohol or gambling abuse

Making the kids wait longer for funds if they choose to not go to college or a trade school

And, while no parent likes to think about their kid getting divorced, it’s important to consider it in estate planning. Assets in general are protected from spouses in the event of divorce, Lynch said, though if funds are co-mingled — say, inherited funds are mixed with the spouse’s funds to buy a house — then that protection is lost. One way to get around that, Lynch said, is to give the child a loan for their down payment (instead of giving them the money outright) and then forgive that loan (or not!) over time.

One way to start passing down smart money lessons is to include your kids in discussions about money — either with your spouse or a financial adviser.

“Children should be in those meetings to understand what type of assets they’re going to come into and what skills they’re going to have to develop before they receive that money,” Francis said.

And if you have young children, it’s important to start them early talking and learning about money.

“The scary thing is we’re seeing young kids graduate from college not only with thousands upon thousands of dollars in college loans but thousands upon thousands of credit-card debt,” Francis said. “They’re starting their life several steps behind where they should be.”

It’s important, she said, to have that conversation sooner rather than later.

“It’s like the sex conversation,” Francis said. “You don’t have the sex conversation on their wedding night!”

And, she said, it’s important to know that there is no right way to deal with a child and money because every child is different. Some do better when given more freedom and others require a little more parental guidance.

“Every child has a different DNA — and they have a different money DNA, too,” Francis said.

She said three of the best money lessons to start them with are:

Money doesn’t grow on trees. That means you don’t just hand them an allowance and let them go crazy. In order to get money, they have certain responsibilities. Maybe it’s clearing the table or cutting the grass. “Make it very clear that ‘This is your allowance but you are a contributor to this family and this is how you are to contribute to this family,’” Francis said. “Then they understand the value of a dollar.”

Credit cards can be the devil. Francis said it’s important for kids to understand that they should not put something on their credit card unless they have the money in their bank account to back it up.

How to live large on less. “That means understand where you’re spending your money,” Francis said. “Understand how to budget and look at ways that you can live large on less and make the most of your money.”

Inheriting a large sum of money doesn’t change a person’s financial habits — “it simply enables you to do everything on a large scale financially,” Kinney said.

“Teaching your children to be smart with their money is more important than leaving behind an inheritance. It is the difference between leaving a legacy or lip service to your kids,” Kinney said. “Diligently coaching your kids on how to fish instead of just giving them fish can take one generation’s wealth and extend it to multi-generational wealth,” he said.